Lease locks in Sandpoint firm

SANDPOINT -- A final decision brought the ongoing saga of the city and Biomedical Innovations, formerly Lead-Lok, to a quiet conclusion Tuesday evening. The City Council, after a discussion that picked up where the previous one had left off, voted to sign a revised lease that gives the medical supply firm five more years of tenancy in city-owned facilities.

“We did have discussions with Lead-Lok following the last City Council meeting, and Lead-Lok was agreeable to the changes," said Jennifer Stapleton, city administrator.

At the previous meeting, the council had discussed removing the renewal clause from the lease, which would have allowed the medical manufacturer to continue under current terms well beyond the five-year period.

Stapleton also told the council the results of her research into the sale of the building. Construction was originally funded with approximately $750,000 in federal funding through the Economic Development Administration and about $230,000 from HUD.

"Any time you have a federal asset valued over $500,000, you have to go back to the funding agency and negotiate the disposition," she said, referring to the possible sale of the property. "Rarely have I seen a return of assets. The standing agreement requires the building be used for original purposes through 2026."

”So basically, you're telling us we can’t dispose of that building until 2026?” said Councilman Bob Camp.

At the earlier meeting, the group had explored the possibility of getting out of the landlord business and selling the Lead-Lok facility outright the following year. Stapleton's news effectively put paid to that idea.

"If we were to let go of this property today, we could potentially lose more than half of its value," said Mayor Shelby Rognstad.

"To me, it's worth it to hold onto this building until 2026," said Councilman Stephen Sneddon, who had previously championed the sale.

He and Councilwoman Deb Ruehle, though, were still not comfortable with giving the company $325,000 via the Sandpoint Urban Renewal District for facility improvements. Sneddon suggested converting that funding to a lease credit instead.

"It would dramatically take away from the lease payments, which could go toward maintenance at the site," said Aaron Qualls, planning and economic development director for the city, who has been involved in the lease negotiations for several months. "It would also require Lead-Lok to front the money for improvements right away.”

“If we give them rent credit, then we have no way to pay for essential improvements," said City Treasurer Shannon Syth. "We need the rent money coming in to pay for those improvements.”

"That would really be shifting that expense from SURA over to the city," said Stapleton. "It's not in our budget for this year."

In the end, City Council unanimously agreed to sign the revised lease and revisit the issues in five years.